December 07, 2010

We know from experience that countless U.S. law firms and solo attorneys continue to benefit from legal outsourcing to India. This has confirmed the wisdom of the American Bar Association's Formal Ethics Opinion 08-451, in which the ABA Ethics Committee found that legal outsourcing is "a salutary trend in a global economy" -- a practice that "can reduce client costs and enable small firms to provide labor intensive services" that they otherwise might not be able to manage. No wonder the LPO industry is booming, and not just because of corporate clients.

But in a blog post last May, we noted that many freelance contract attorneys in the U.S. have taken issue with this. In particular, freelance lawyer Lisa Solomon, a respected blogger with Research and Legal Writing Pro, pointed in part to a couple of Indian legal outsourcing providers that apparently are guilty of atrocious spelling, grammatical, and more serious errors. Now Lisa, we would like to return the favor!

The managing attorney at a successful Arizona business law firm recently turned to offshore legal offshoring, precisely out of exasperation with his experience in trying to make use of U.S. freelance contract attorneys. This is from one of his emails:

The first project I'm sending along is a Response to a Partial Motion to Dismiss. The Complaint was drafted by an ex-contract attorney, and filed while I was in trial. There are not many documents or issues involved, and the client received a Cause Determination from the EEOC, so the Complaint should have been a cake walk. Instead, the Complaint is a piece of crap. Of course, I allowed it to be filed, and therefore have only myself to blame. I mention all of this in the hopes that you will understand how eager I am to find a source of consistent, high quality work that does not eat-up all of our profits (and then leave as soon as soon as an offer comes along that includes box seats at Suns games).

And here is part of another email this law firm client sent after switching to Indian LPO services instead:

I would be happy to give a testimonial providing a comparison to U.S. contract attorneys who seem incapable of turning in coherent work product, on time, and without doubling the number of hours it should have taken. And don't get me started on full-time salaried associates.

And below is what this managing attorney said to one of his firm's clients:

The company I told you about is SDD Global Solutions. I've used dozens of contract and full-time attorneys here in the U.S., and thus far, SDD Global is doing a far superior job at drafting high level motions and pleadings for me in federal court.

But don't get us wrong. It would be an obvious mistake to conclude that all freelance contract attorneys in the U.S. are incompetent, or lacking in sufficient ambition to serve their clients. That would be just as silly as concluding that because there are some incompetent Indian LPO companies, the entire offshore legal outsourcing industry is therefore suspect.

Having said all that, some harsh economic facts seem to belie the suggestion that U.S. freelance contract attorneys are providing serious competition to offshore LPO providers. Dean David Van Zandt of Northwestern University School of Law estimates that given student loan obligations, living expenses, etc., $65,000 per year is the break-even point that U.S. law graduates must earn just to stay afloat. The mavens at Above The Law say that "[a] break-even point of $65K seems low to us, given high law school tuition, the borrowing costs associated with student loans, and the opportunity cost of going to law school when you could be earning a salary in some other industry." They point out that "[a]nother academic, Herwig Schlunk of Vanderbilt Law, believes that the break-even point is much higher." But even if Dean Van Zandt's "low" $65k figure is accurate, the fact remains that super-smart, ambitious, enthusiastic, Indian lawyers from even the finest law schools, and highly trained in U.S. legal research and legal drafting, are justifiably happy to work for one-fifth of that amount, considering the lower cost of living in India, among other factors.

Perhaps that's why this month's Business Today magazine, in yet another major media story on the growing LPO phenomenon, reports that the average hourly rate charged by U.S. freelance attorneys is $50-100, contrasted with an average of $25-40 for Indian legal outsourcing attorneys.

Given all of the above, it seems that what we said in last May's blog post could bear repeating:

Some clients of our law firm's Indian company have chosen our India team over U.S. contract lawyers because, according to the clients, the contract lawyers they tried were (a) not consistently available to do the work, (b) required training by the clients, (c) delivered a work product that required extensive revision, and (d) usually, but not always, charged higher fees. As the LPO critics have pointed out, it also is easy to find examples of unsatisfactory legal services companies in India, so we're certainly not saying Indian providers are always better, or even always less expensive. But when they are better, or just as qualified, and when they are less expensive, they are going to be hired.

For the sake of U.S. freelance attorneys, we hope their argument does not boil down to a plea to simply “Buy American,” even if the result is more expensive and not any higher in quality. Corporations, law firms, and solo attorneys are increasingly unwilling to do that, just as U.S. consumers are not going to stop shopping at WalMart (where most of the products are from China), or stop buying foreign-made clothes, etc. And if anyone wants to appeal to compassion for the human suffering caused by unemployment and poverty, then suggesting a boycott of the people of India may not be the most logical or effective means. A better strategy for U.S. contract lawyers to promote their services might be to find ways to compete with the Indian providers regarding all of the above-mentioned attributes that clients want.

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